Nov Ethanol Market Influencing Factors Analysis
Introduction: In 2024, China’s ethanol prices fluctuated downwards. The supply of edible and industrial ethanol increased. Although there was new capacity in the downstream chemical industry, the overall demand was limited. Moreover, feedstock prices fell, leading to weak cost support for the ethanol market. In addition, the capacity of coal-based ethanol was put into operation, but the market share was limited, so the price competition was fierce. As a result, even in the traditional peak season, ethanol market prices continued to fall. At the end of October, the months-long decline was briefly ended. The ethanol price in Henan rebounded at first, followed by Northeast China. In November, ethanol prices will be mainly affected by supply, demand, cost and logistics prices.
In November, the imbalance between supply and demand in the edible and industrial ethanol industry will likely become prominent. The increase in supply is expected to be larger than that in the demand, and the cost support may be limited. In addition, logistics prices are expected to rise. Overall, ethanol prices are predicted to be flat to down.
The overall supply of ethanol is anticipated to grow in November. According to SCI, the supply of edible ethanol in Northeast China is estimated to increase in November, while that in Henan may remain stable. The supply of coal-based ethanol will possibly ramp up, but the supply of fuel ethanol may decline.
In Northeast China, the operating capacity of edible ethanol in November will rise by about 80kt/a, with the daily output rising by about 2,100-2,200mt. The total operating capacity of coal-based ethanol will increase by 750kt, and the daily output will increase by around 1,800-1,900mt. Among them, the 100kt/a ethanol unit of Heilongjiang Xinghui Grain Processing in Heilongjiang is planned to be restarted, and the daily supply is expected to increase by about 200-300mt. Inner Mongolia Autonomous Region Baiyecheng Alcohol Producing plans to restart its 200kt/a ethanol unit, and the daily supply is estimated to increase by about 500mt. The 100kt/a ethanol unit of Dongfeng Hualiang Biochemical in Jilin is scheduled to be restarted, and the daily supply is expected to rise by about 200mt. The No. 4 line at Meihekou Fukang Alcohol may resume production, and the daily supply is expected to rise by about 700mt. Heilongjiang Sunlong Alcohol has a restart plan for its 150kt/a ethanol unit, and the daily supply is expected to increase by 500mt.
The supply in Mengzhou, Henan Province will likely be stable, but the inspection of environmental protection in winter may affect the operating rate. Large ethanol producers in East China have plans to resume production of general-grade ethanol in the short term, with an increase of 800mt in daily output.
In terms of coal-based ethanol, Xinjiang Tianye (Group)’s 250kt/a capacity may resume production, and the 500kt/a capacity at Shandong Hengxin Group is estimated to go into production in early November, but the official production of qualified products is awaiting further news. The start-up of the 250kt/a capacity at Henan Ruibai New Materials is uncertain. Other coal-based ethanol units will be operated stably, but the possibility of output reduction for individual cuts cannot be ruled out.
Fuel ethanol production is currently suffering from serious profit losses, and ethanol producers are not motivated to produce fuel ethanol. Some producers have reduced the output of fuel ethanol as much as possible and increased the output of general-grade ethanol. (The above changes in output and operating rate are subject to the actual operation of the producers).
The downstream consumption is projected to grow slightly in November. With the arrival of winter, the demand for liquor will increase. In the chemical industry, the changes in operating rates of ethyl acetate units will be mixed. Yankuang Energy Group has operated its unit at full load, and Anhui Huayi Chemical is expected to resume full production in H1 November. Other ethyl acetate units will maintain normal production. Therefore, the operating rate of the ethyl acetate industry in November is estimated at 60%. The field of flame retardants will be in the sales slack season, and the operating rate will not be high. The ethylamine market will enter the peak season, and the producers will likely maintain full production. Silicone enterprises will maintain normal production and purchase ethanol on rigid demand. Some plants of ethyl methyl carbonate have plans to restart production in late November, with an overall operating rate of less than 40%.
The cost support for corn-based ethanol prices will likely be strong in November. The overall downstream demand for corn may still have certain positive support for corn prices, so the corn price in November is expected to rise. However, the loose supply in the short term may limit the increase in corn prices. In the later stage, players can focus on the intention of grassroots grain sales in the production areas and policy news guidance.
With the arrival of snowfall, the logistics prices in Northeast China are expected to increase. At present, it is difficult to find vehicles on some routes in Northeast China. With the arrival of frequent snowfall, the ground is frozen and the highways are closed, making it more difficult to deliver goods in Northeast China. Therefore, the freight will rise, and the transportation time will also increase. The increase in freight will cause the delivered prices to sales areas to mount up, which will be bearish for ex-works prices in Northeast China.
In general, China’s ethanol supply will ramp up in November, and demand will also increase slightly. In the early stage, ethanol enterprises will have low inventory and mainly produce to deliver previous orders. Moreover, ethanol producers that plan to restart production in November have not yet started up, so ethanol prices will likely remain stable. In the later period, with the increase in operating rates and the commissioning of new coal-based ethanol capacity, competition in the ethanol market will intensify, so ethanol prices may weaken. However, supported by the cost side, the decrement in ethanol prices will be limited.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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